Bizzy’s AM Coffee Biz-Econ Links (030706)

Free Links:

• Isn’t this one of the signs of the Apocalypse? The Pope has an iPod (HT S.O.B. Alliance member Large Bill). It was “presented to the Pope on Friday by a group of Vatican Radio employees, according to the Catholic News Service.” He got his later than Queen Elizabeth II, who bought one with more memory than the Pope’s last year.
• This is either really offensive or an urban legend — I vote urban legend, but I can’t be too sure (HT Schneier Security Blog). The story is that by making a $6,500 payment against their credit card balance, a couple triggered some sort of red flag that caused the bank to contact the Department of Homeland Security (DHS), who would not release the funds and permit the payment to be credited until whatever the “threat alert” that payment caused was lifted.See for yourself; if you’ve always wanted a copy of your own, the Patriot Act as passed by the House in October of 2001 is here, and the sections supposedly giving DHS jurisdiction are 351 and 352. Of course, there have been amendments to the law and regulations issued since then — Happy hunting.
• French Prime Minister Dominique de Villepin wants to prevent privatization (backup link here; HT the on-hiatus EU Rota) of the government-owned electricity company — Nothing like being at least 20 years behind Margartet Thatcher’s UK.
• The Social Security number disclosure mess in Ohio isn’t Ken Blackwell’s fault (HT NixGuy). Blackwell is currently Secretary of State and is running for governor as a Republican, so of course what was revealed was opportunistically pounced upon by his opponents:
  

  Secretary of State Ken Blackwell was accused last week of helping criminals and putting certain Ohio business people at risk by including their Social Security numbers in filings available to the public. The charge is baseless. Blackwell followed the law when he released Uniform Commercial Code Forms, which are used to track debt information for businesses. He cannot be faulted for that.

  There is a problem with the law, however. It should be changed to require the redaction of Social Security numbers from UCC forms. The basic numerical DNA of a citizen should not be available for anyone to see on the secretary of state’s Web site.

  No kidding.

• Pension Tension (HT Don Luskin at PoorAndStupid.com) — The actuarial liabilities of public pensions, even excluding Social Security, probably dwarf those of private-sector companies:
  

  Already facing deficits of more than $110 billion, public-employee pension plans in Los Angeles and elsewhere in the state have overestimated future investment income in a move that could imperil the systems and require taxpayer bailouts, former Mayor Richard Riordan and other financial experts warn.

  Pension systems in California are operating on assumptions of a 7.5 percent to 8.5 percent annual return on investment portfolios, but investment experts say historical trends suggest stocks will increase by only 6 percent to 7 percent annually.

  If you lower the assumed rate of return, you necessarily have to assume that more taxpayer money will be required to meet pension obligations. Or (heaven forbid), you have to start renegotiating overly generous pension promises that should not have been made in the first place, while doing your best not to impact people who are roughly age 50 and older who have might have begun planning on the promises made.

  The article is a bit incomplete; an investment of all funds in stocks would probably yield the 7.5% - 8.5% the funds appear to be assuming, but prudent pension fund management usually dictates that a portfolio should have at least some more conservative investments, such as bonds and money-market funds, included in the mix. Since that should be the case, an assumption of 6% to 7% is more reasonable.

  The bottom line is that public pension managers and their plan sponsors (i.e., the cities, counties, and the state) had better face up to the problem, which grows worse with each passing day.